Why Your MQLs Aren't Converting

If you take your company from a process where everything's broken and people are running around and they're just doing the best they can to like a super tight process where we've got super fast lead response time where we follow up five times or whatever it is on every single lead before we give up. We've got the right messaging dialed in. Everything's like reported management can get visibility and they can see how each of these leads are followed up on. There's no reason you can't get a 30% increase or in this case with our customer a 2500% increase. Welcome to go to market science. There's an art and there's a science to go to market and in this podcast we talk about the science by interviewing CROs, private equity investors and other sales and marketing experts as well as talking about what we learn every day in the trenches helping to build go to market engines. Welcome back to another episode of go to market science. My name is Rachel Buchert. I'm the marketing manager at Union Square Consulting and with me is Eddie Reynolds our CEO and founder. Hey Eddie, how's it going? Yeah, I'm great. I'm excited. What are we talking about here? Yeah. So today we are talking about why are mqls aren't converting to else QLs and Eddie, this was your top idea. So what gave you the idea for this topic? Well, I don't know that this was like a groundbreaking idea. It's just we have calls with customers and prospective customers and partners all the time about this. So even just yesterday and obviously we wouldn't be here today talking about this. If this was the first time I ran into this, but yesterday we got introduced to the CMO and a company that's doing well over $100 million in revenue. New CMO, she seems to really get it. But the marketing engines broken or the marketing and sales engine is broken. And she wants to go in and dial in the mqls, dial in attribution, figure out what channels are working, et cetera, et cetera. But while the leads aren't converting, I won't give it all away. And I will talk about exactly why they're not converting. And it's not just this particular person I had just so happen to speak with yesterday, but we see this again and again and again. And so if anybody is listening to this and they're saying we're generating a bunch of really quality leads and we can't get them to convert. I want to talk about all the things that I would do to try to resolve that. There are a number of different things that I would want to look at. A number of things that I would do. I would then look at other things after I do those things. How we would like dissect this problem and solve this problem is we have done with many clients that we've had. And how we fix this problem. Yeah. I wanted to talk about this because I keep running into it all the time. I mean, I think it's a really common issue. And we hear a lot about like the mql debate. People saying, you know, the mqls dead. This is why you shouldn't use mqls. Yeah, yeah, yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Why do you think that this debate hasn't gone away even after years of people wrestling with it? Because I mean, mqls start not great. In the context of our conversation today, when I say mql, I just mean a marketing lead or a marketing account or an all bound account or whatever. My definition of mql is we have something that is worth sending to salespeople. That's it. And if you want to say, Hey, mqls are terrible. We shouldn't like use mqls anymore. We shouldn't incentivize marketing to generate mqls. I agree. I mean, Rachel, you're not incentivized to generate mqls. You're incentivized to generate revenue. Heck, like half of the way that I judge you is our inbound revenue. And the other half is all of our revenue because I think marketing touches everything. So yeah, sure. I'm on board with that. We've written a ton of content talking about how we recommend that most organizations go to all bound or a bm or whatever we want to call it. I'm all for all that stuff. But for today's conversation, we're just going to use mql because it's easy. And what I'm talking about is how we convert some level of inbound interest into a customer. That's it. Call what you want to want to call it. I don't care. But we'll call it an mql for today because it's easier. Is any part of the problem about the way that people use mqls or the way we're defining it? Yeah. Yeah. Absolutely. Well, I think that you and I talked about a lot of this on a lead did at least one other podcast on this and talking about like the pipe gen 2.0 on mql and its purest form marketing qualified lead being a single individual that has expressed some kind of interest is really problematic in an organization where there's 10 to 15 different decision makers. In many organizations in mql, it will signify something that is hidden hit a certain score and a lot of times those scores are meaningless and so the person on the other end of that mql doesn't actually have any buying intent. So there's lots of problems with that, which we could dissect on today's podcast. But as I said, like for the purposes of today's discussion, what I really just want to focus on is, why is it that somebody that we think has buying intent and interest in our product or service? That we are then reaching out to theoretically, via sales, not converting into revenue. And not why is that one individual or one organization not converting, but why is an extremely large percentage of those we deem is qualified to route to sales, not converting such that this is a problem in our business and a problem in our marketing engine. And a problem with our cost of acquisition. I want to break that down here today. I mean, I guess I'll just ask the straight up question. Why do you think the most common reasons are for that? It depends. I mean, let's break this down like scientifically or mathematically. Like there's one of two reasons that a lead doesn't convert either the lead sucks or our follow up process sucks. That's it. There's only one or two possibilities. It's like X times Y equals Z and either X and or Y are not good. So how do we look at that? I think like it's really hard to objectively look at a lead and say, oh, this is a shitty lead. I mean, like that's the classic example sales people are like, how the leads suck. That's why I'm not calling on them. I mean, like this is literally like part of the core of Glen Gary Glen Ross way back in the day. I don't know Rachel. You old enough to remember Glen Gary going Ross. I'm not sure I am to be fair. Do you know what it is? I only know it because of you talking about it. I don't remember actually watching. It's a super old school sales movie and there's like three guys in a room and come on going to because if people have seen it, then they've seen it. If they haven't, they haven't. But there's sales people. I mean, super old school. They're like, they're calling clients from a pay phone. It was like 1980s, whatever. And they're complaining about the leads, right? And now we're sitting here recording this in 2025 when we've got like all these digital leads and AI and attribution and lead enrichment, all this crazy stuff and people are still complaining about the leads. So that's my only point and bringing up Glen Gary Glen Ross and showing how old I am. Although I'm not, I don't think that I'm old enough to have watched that movie when it came out. But yeah, like it's one of the movies you're supposed to watch if you're in sales. So we complain about the lead quality, but we can't objectively say that leads are good or bad. With any level of assurance, unless we follow it up with those leads. So the first thing I want to look at, and this is something I can tell a story about something we didn't want down to the customer in this regard. The first thing I want to look at is do we have a solid follow-up process? So let's sit down and let's look at the leads that we've won, the ones that we've converted and what it's taken. I would want to take a look at every single lead that we've turned in a pipeline and closed one and reverse engineer it. How many times did we reach out? How many times did we reach out once and we said a meeting? How about twice? How about three times? How about four times? Do we reach out via email? Do we reach out via phone? Do we reach out via LinkedIn? Do we reach out via Twitter? Did we send them a package in the mail? Whatever it is, what did it take to convert that lead into pipeline and then convert that pipeline into closed one business? If we can look at that and then drill it on like the 80/20 and understand what did we do to convert 80% of those leads into pipeline, then we can set a process and we can say, okay, for example, we are going to follow up with five emails and five phone calls before we mark this dead no response. Seems like a perfectly reasonable approach to me. That's what I did when we were at Salesforce. That's what I do here at USC. It's worked pretty well. Well, there's four or five six times we can debate that, but something like that. It is amazing to me how many organizations I look at and you'll see a number of leads that like haven't been followed up with it all. The woman I spoke with yesterday said that they have hand razor leads from the past three months that haven't received a single touch. Somebody's raising their hand saying, I would like a demo of your software. That's crazy. And no one falls up at all. Forget speed to lead. They don't follow up at all, which is insane, right? And you see this commonly and it's so weird for me to be talking about this in 2025, like presumably somebody's listening to this and they're thinking like, I want to learn best practices and go to market and maybe Eddie has some nugget of information that would be valuable for me. And then there's this organization that like can't get sales reps to follow up on a potential customer that is like literally filling out a form and saying, I would like to see a demo of your software or they reach out one search wife over the course of two weeks and like, Hey, like this isn't any good. Some giving up. And let's look at this objectively. The vast majority of organizations, the person following up with these leads is the most junior person that's ever worked in their organization or worked in sales. There are oftentimes fresh out of college grads there and SDR, they have no idea what they're doing. And if we don't have a clear process in place to say you need to reach out four or five times, you need to record this in whatever tool you're using to do that. You need to like leave a voicemail, etc and record that. Then we can't objectively measure whether or not these leads are converting. If we do that and we collect some other information along the way, then we can look back and say, OK, these types of leads are converting these types of leads are not converting. And we can have an objective viewpoint on this. I'll give you a case study with a customer that we've worked with and don't know if we can name them because we still haven't had approval on this. But basically they were facing this exact issue. They didn't have SDR's BDRs. They had the equivalent of account executives in this organization and sales people were like leads suck. We're not following up with them. Well, how do we validate this? So we worked with them and they built out a SDR BDR team to fall up with this. We helped them define the process. We helped them get the tooling in place. We helped get the reporting in place. We all managed to stay on top of them to make sure they're doing the right thing. They're doing all the right things. They fall up with all these leads that got good messaging in place. Everything's dialed in. They're following this process. process consistently. You can see it in the reports. Here's the lead. Here's all the follow-up and no response. Guess what? The leads are awful. Okay, we can't convert these leads. Now, you could say, "Hey Eddie, like you say that because you're on the side of sales in the scenario." It's okay, fair enough. Let's test this theory another way. What if we just give them cold prospects? So they took that team and they just turned them on cold outbound. We worked with them to define like really take territories, did a capacity plan for them, figured out the exact number of accounts that could cover in any given creative time. We used a bunch of data to figure out the best accounts for them to cover that were within their capacity to actually cover those accounts and tweak the process for outbound and said, "Follow these steps. Reach out. Here's a messaging. "Nadi-adi-adi. Here's the cadence." And they reached out and literally within weeks they're booking hundreds of thousands of dollars of qualified pipeline. You know, like, "Okay, it's not that the process is broken or the reps aren't working or anything like that. It's that the leads indeed are not qualified." That thing gives us the opportunity to go back and say, "And one of the things that I love about having an outbound motion is you actually have a basis of embarrassing." Because my question would be, "If I have an infinite number of cold prospects that I can call and it takes X number of calls to generate an opportunity and you give me a marketing qualified lead and it takes more calls to generate a smaller opportunity that has a lower close rate that results in less revenue, why in the world would I ever want to call that lead or ever want to spend money having someone else call that lead?" Like, it doesn't make any sense unless I just have like infinite capital and infinite resources and then you say, "Yeah, inbound doesn't work as well as outbound, but we would just have so much money. We have like tens of thousands of SDRs." It doesn't matter and we're making money on both of them. Like, "Okay, cool. I don't run into too many organizations like that. I would just say like, "Well, why don't we just do outbound?" Until you like narrow your MQL into a definition that it is at least converting into revenue as much if not more than outbound, then it's like, "Okay, well, the reason we're calling these inbound leads is because they convert more than cold outbound prospects." That's how I could justify spending money on having dedicated SDRs to do nothing all day except follow up on those leads or taking my AES valuable time to follow up with these inbound leads. It really should in my mind cross over that bar. So, yeah, for me, the first step is making sure that we have a dialed in follow-up process so we can objectively measure whether why certain leads are converting and not converting. And ideally, if we have an outbound motion, we have a benchmark that we can set against. That's not some other company with a different product selling into a different industry that is our own company and our own product selling cold versus warm inbound. I remember the case study that you're talking about and just to give our listeners a scale of what this change was like, they went from something like 0.2% lead to closed one conversions to 5% lead to closed one conversions within like, I believe it was the first three-ish months or so, us rolling out the changes we helped them make. Yeah, it was a 25x increase in the conversion rate from lead to closed one, which is incredible. It's so funny to me, it's like it's almost like such a high number that it's unbelievable. And I remember talking to my old boss about this way back in the day, I worked for a company that built software tool on top of Salesforce. And my boss was a little like, how do I say this? Not as rararized as this. And so Salesforce at the time would have some stuff that would come out and be like, you get a 32% increase close rate from using Salesforce. My boss is like, are you serious? Kind of bullshit is this, right? Like, I'm just going to sell 32% more deals because I'm using Salesforce. Are you kidding me? And then I went and worked at Salesforce for three years and I saw all our customers that I was working with. And then I thought about it and I'm like, and this is a long time ago that Salesforce did the study. But I looked at it and I'm like, so first of all, this was like, just survey data from actual Salesforce customers done by an independent third party. So in theory, in theory, could be right. Obviously, you don't know like about the selection bias. But at the time that this stuff was coming out like 2010, 11, 12, 13, a lot of companies that were using Salesforce were a little bit on the more innovative bleeding, not bleeding edge by any means. There were still a lot of companies I was talking to that were like trying to do stuff out of Excel or some on-prem system or whatever. I don't really think it matters whether using Salesforce or an on-prem. It's just like, do you have a really tight process. And so I think if the company is going to go and spend a bunch of money on Salesforce, they're more likely to have a nice tight process that we're talking about. The company that's still operating out of Excel or off of a whiteboard or off of an on-prem system or whatever. And so then I think about it like, okay, if you take a company that has in this example, no follow-up process. Each rep just gets out of these leads and one falls off, the other one doesn't. Sometimes they follow up, sometimes they don't. They're busy one day, they're not busy in the next. And you take that and you translate that into a company that has a super tight follow-up process. And they say, every time a lead comes in, if it's a hand razor, we have to respond within five minutes. I mean, we know the stats on that. There's an exponential return, if you can respond to a hand razor or high intent lead within five minutes or less versus waiting even just 30 minutes. Then you go to like a couple hours, like forget about it. And then by the time like you wait a day. And the reason this happens is because usually people are doing research and they have maybe a half an hour block and they're doing some research on a couple potential solutions. They reach out to one vendor, they reach out to the next vendor, they reach out to the next vendor. They have a call in 20 minutes. First vendor reaches out. Hey, what's up? I saw that you reached out, you wanted some information. Yeah, yeah, how does this work? How does this work? How does this work? Okay, that's really cool. Like, can I get a demo of this? Yeah, absolutely, like whatever. Let's schedule a call for tomorrow. Okay, cool. I can do that. Maybe the second vendor reaches out and you're like, oh, hey, do you want a demo? Uh, yeah, yeah, I'll take a demo. I'm really busy the next couple days. How about Friday? Okay, okay. We can do Friday. Didn't they jump onto their call? The third vendor reaches out, maybe two hours later. They open up their email. Now they have two demos scheduled, one tomorrow, one Friday. Let's say it's Tuesday today. They have one on Wednesday, one on Friday. And then they're like, oh, I got so much of my plate right now. I forgot, I've got to do this other thing. This other thing, maybe it's the end of the day and they're like looking at that email. And they're like, do I really want a third demo? Probably not. I think I'm good. I'll just compare these first two. I mean, this is how buyers operate, right? This is why the vast majority of organizations or deals are won by the first vendor to respond. Yeah, people don't realize how busy their customers are on a day-to-day basis, especially if you're selling B2B. Since I literally literally just got an email call while we were on this podcast from a lawyer, I was trying to do some stuff for like an employment platform and I was asking them a question and they're like, do you want a free consultation with this lawyer? And I'm like, yes, or whatever. And then like the person was like emailing me back and forth and like, I just couldn't get to them. And then I'm like, I already have a lawyer. We already have an employment attorney. So I just call them up like I text them on the phone and he calls me back and he's like, hey, what's up? Like, okay, here's the answer to your question. I'm like, okay, cool. Done. Then this lawyer calls while we're on the podcast. I'm never returning that phone call ever. I already have my solution done. And the reason they're doing this, they signed some big agreement nationwide with some large like HR organization that we work with. So they could get leads so they could land me as a client to their law firm. And because they didn't respond fast enough, their opportunity is now zero. I will not respond to their email. Not because I'm like, spiteful, but just like, I have what I need. I don't need to talk to them now. And so anyway, like, I think the whole point I'm trying to make is that this is how customers are operating. And if you take your company from a process where everything's broken and people are running around and they're just doing the best they can to like a super tight process where we've got super fast lead response time where we follow up five times or whatever it is on every single lead before we give up. Everything's like reported. Management can get visibility and they can see how each of these leads are followed up on. There's no reason you can't get a 30% increase or in this case with our customer a 2500% increase, which is just insane. And I think a function that is also like leads election as well. Right. Yeah. But there's absolutely no reason that you can't dial this stuff in if that's where you're starting from. You mentioned five minutes in your example. Is that the actual time that people should be aiming for? I always hesitate to say it is, but the short answer is yes. I mean, you can, I guess, this is a podcast so we can't really show a visual. You can Google this like this as well. Established research and it is like an exponential curve and responding to somebody in one, two, three, four, five minutes. The conversion rate I forget the exact number is like 23x. What it is if you just like wait a half an hour or something like that. I don't have this committed a memory, but it is literally an exponential curve. Yeah. And we have a version of a graphic like that also in the content that we wrote on this speed to lead. Kind of an old news that are at this point. You might have to be people. I think it's an old concept. Like I would hope, I hope somebody listened to this. The like speed to lead is not a new concept for them. I don't know if that's cool. Welcome. Speed to lead super important. But that's just one piece of the equation. Another piece of the equation is how many times will we follow up? Another piece of the equation is lead enrichment. Like do we have all the right information? If we want to go account based, the other equation would be like, are we reaching out to other folks in the organization? I didn't really want to go down this path too much, but if there are 10 to 15 potential decision makers in an organization, and you have like a super hot lead and you reach out to that person four or five six times and they don't respond, do you want to mark that like dead no response without reaching out to anyone else in the organization? Let's say your average deal size is $100,000. I don't know. Is that really a best practice? Like you can I'm guilty of this. I do this all the time because I'm very, really spread thin. I really can't tell you that that's a best practice. You have to think like, okay, this organization has interest. There's a bunch of other people that are interested. Why would we walk away from this so easily? So in terms of like cadence, channels, trying different personas, what does a good follow-up process actually look like? I think it depends on the organization. It depends on the price point that you're selling to. And I don't claim to be like the world's best salesperson. So it's a little bit but outside of my scope. But I think like the canned answer is that you wanna reach out a number of times via email, phone, maybe LinkedIn, whatever other channels are relevant. Yeah, I mean, there's like all these Slack channels right now. So like that might not be relevant for most organizations, but for us, it's amazing to me, like how many people we interact with that are like literally sitting in like the Pavilion Slack channel. Yeah, whatever channel you can reach people. I mean, I have a friend who runs a digital marketing agency that's quite large and they've planned a bunch of other clients that just through like sending packages in the mail. So like whatever works, I think you have to look at like what works for your organization. The key point is consistency. I don't think I've ever met a company that's like, oh, yeah, we have a hundred million in revenue, but we have no idea how we convert a lead. Everybody knows how they convert a lead, but is the team doing it consistently? So how do you recommend teams actually track and enforce their follow-up quality and consistency? For me, it comes down to something as simple as a report, right? Like whatever tool we're using, let's just use Salesforce as an example. We're gonna go and like we're gonna log five follow-ups, 10 follow-ups, 15 follow-ups. I mean, I'm being conservative. Like a lot of people believe that they should be following up like 10 to 15 times on a lead before they give up. Okay, cool. Like show me the report to just count how many follow-ups we did on each lead. And then here's all the leads that were marked like dead no response and how many follow-ups did we do? How many of those leads marked dead no response? We only followed up with five times, three times. That's an easier report to run. Then the question is, how do you get management to enforce that? Like is management gonna take that data and sit down and be like, hey, Bob, by the way, I realize my example person is always named Bob, I don't know why. So hey, Bob, like I see that you had all these leads and you followed up with this person twice and this person three times and this person once and then you marked this as dead no response. I think that you should follow up more often. - And if you're doing everything right, like you're responding within the first five minutes when they're our handraiser and you're tracking everything and your cadence, you can just see everything's good for your follow-up process, but they are still not responding or converting. Does that mean that the MQL is bad? - Probably, I mean, you could have bad messaging, right? But if it's not like lack of follow-up and it's not bad messaging, then it's a bad in QL, right? I'm trying to think of any other reason why lead wouldn't convert. They clearly don't exhibit enough interest. So a lot of organizations will come in and they'll say, okay, well, let's try to tweak our lead score and the score has to be 100 in order for it to be an MQL and then we'll route it to sales. You know, okay, cool. That's a hypothesis and there's nothing wrong with that. I think lead scoring is incredibly difficult and like a few people ever really perfect it, but we gotta start somewhere, right? So let's say it's 100 and then we route all these leads and everybody falls up and they don't convert. Okay, cool. Well, like which ones did convert? What can we learn about that? That goes back into like our scoring methodology. It goes into our ICP and buyer personas. If those leads aren't converting despite consistent quality follow up with good messaging, then we've gotta look at how we can qualify the value of those leads. And hopefully some of those leads are converting. So how can we slice and dice them and bucket them and say, oh, wow, these leads are really converting. So like, let's focus our energy's there. Another issue might be capacity, right? So we talked about this example where we have like one, two, three follow ups. Why is that rep only following it with a lead twice? Well, maybe that rep has too many leads and they just can't handle it. So like, we always ask this question of customers like have you done a capacity plan? Most will say no. Okay, well, if we haven't done a capacity plan then by definition, like we don't know how many leads a rep can handle. If we want them to follow up 15 times and let's say that they're supposed to do 150 activities a day, then they could do 10 leads a day effectively, right? Let's say that like 15 times is like the maximum in the average that we want them to follow up as eight times because you know, a bunch of people answer and they say, "No, I'm not interested," or, "Yes, I'm interested." And I would like a meeting. Okay, so let's say it's eight. All right, and then let's just say for simple math we want them to do 80 activities a day. All right, so that's 10 leads a day effectively. And so you've got 20 days in a month, they can do 200 leads per month, simple math. If you give them 1,000 leads, there's just absolutely no way that they're ever going to be able to follow up eight times. Which is not going to happen. Yeah, that's kind of like a core foundational thing that you need to be doing for your follow up. Because how do you know that you have a good follow up process if you don't even know how many leads your reps can follow up with? Yeah, unfortunately, like we all get busy, we're busy trying to hire the right people and implement the right processes and doing all these things and these things slip to the cracks. I mean, I'm even guilty of it. We just hired two reps and we were trying to put together territories. You were involved in this and all of a sudden I'm like, "You're 300 accounts." And then I was like, "Hold on a second. Wait, did I do a class-a plan?" Wait, hold on. I did the class-a-man, I did the math. Like we want people to send super personalized outreach and be really focused on people and follow up with them diligently. And I'm like, "They can maybe do that with 100 accounts." There's no way they can cover 300. So then I'm like, "Hey, this is where we're kind of getting off topic." But I'm like, "Hey, guess what? You're now a data analyst. Here's 300 accounts. Why don't you figure out which of these are the top 100?" And Rachel, you have access to clay. Why don't you do it? Absolutely, and as much better me doing it than like you're paying your sales reps, they're hourly wage for just researching stuff and they should be spending that time trying to sell, right? So yeah. Well, it's not even there. Oh, really? Wait, just talking to a client like an hour ago and I was like, "Hey, if you give a rep a million dollar quota, that means their time is worth $500 per hour." Yeah, that's kind of where I meant, yeah. Well, I'm just clarifying that like, you can look at it from a cost basis perspective and you can say, "I will, you know, let's say I pay "somebody a hundred grand a year all in." So then that's $50 an hour. But if the goal is to generate a million dollars of revenue, then that's $500 an hour. Not suggesting that you should pay somebody a hundred grand a year for a million dollar quota. I'm just trying to use simple math. And I'm like, well, what should we focus on as an organization? Like what's more important, the amount we're spending or the amount that we need to generate in revenue? Exactly. Yeah. You want them spending their time selling? That's the most valuable activity that they can be doing. Yes, we do. Let me take this back really quickly. So let's assume we've got this process dialed in. As we mentioned, everybody's following up. And then we're also collecting some level of data to slice and dice our leads. We can see what channels they're coming through. We can see whether or not they're a hand razor. We have maybe some semblance of lead score. We obviously have visibility into, like, let's hopefully at this point or soon, we have some lead enrichment. We can see what industry they're in, what revenue they have, et cetera, et cetera, like different data points that are important to us. We have an infinite number of ways that we can run reports and slice and dice data and say, OK, well, let's look at every single company that has above or below this revenue. What was the conversion rate, like, you know, to pipeline or not? Let's look at every single lead they came in from this channel. What was the conversion rate? Let's look at every single lead that, like, came to a webinar. We can have infinite opportunities to slice and dice this. But this only works if we have a solid consistent follow-up process across all those leads. If we do, then we can look at that and drill in and say, OK, these are the leads that are really converting and then are really worthwhile. And especially if we have outbound, we can say, OK, these leads that are converting to more revenue than outbound per activity or per leader whenever. And so if we don't have enough of those, then we could do a couple things. We could say, all right, let's double down on our marketing spend in these areas. And/or we could take those reps and move them over into outbound and have them make up on calls and generate more revenue than they can generate with the remaining leads that aren't as worth as much. Intent is a really big part of this, too, right? When we're trying to reverse introduce and figure out our ICPs from this stuff and our bar personas and things like that, how should our sales teams be thinking about intent signals as well? That's a really great question. I mean, and first I would say like we have multiple different types of intent signals, right? We have third party intent. We've got tools like six cents. But we also have first party intent, which is what marketing have they consumed from us, right? Like did they go and download this white paper? Did they check out this? Did they come to a webinar? Did they come to an event, et cetera? And like that's the whole idea of a lead score is we are trying to use those different data points to score that lead the best we can. Some organizations like us, we're a very small company. Like we don't have all these tools. We don't have six cents. We do have some first party intent, but it's limited as to what we can measure. We have to do the best we can. Other organizations have all these tools and all the analytics and all the people to run the analytics and so they can go wild. Whatever it is you have, I think that you want to take that and try to create your first version or your next version of a lead score. And then what we want to test is like if the lead score is X, does it convert or like each of those things? I mean the lead score is made up of component parts where you say, okay, just looking at intent for example, we say, okay, like a white paper is worth this many points, a webinar is worth this many points. This thing is worth that many points. And once you get past this many points, then you're an impu, well, that's a hypothesis. We don't know if that really is going to reflect an opportunity that's gonna have a high conversion rate. So again, we can slice and dice that number and we can say, well, you know, maybe every single time somebody comes to a webinar, like there's a really high conversion point, maybe we need to increase the score on webinars. Maybe the white papers aren't worth as much. I mean, this is a very difficult and also be, it's not a perfect science because by definition, like you don't have like one single variable, like you would in a scientific experiment, you got multiple variables, so you got to do the best that you can. And this is why I say it's so hard to get this right. And it's just like an iterative process, but you keep packing away at that. And you try to like slice and dice the data and see what is the most likely indicator that something is going to convert. And how do we narrow in our definition of what leads we should route to sales? And when we should let sales focus on other things such as outbound. It seems like a super iterative process that probably isn't gonna like come together perfectly within the first month, especially if you have lower volume of leads coming in lower volumes of sales, right? So. If your current lead scores aren't perfectly correlating with performance, and you're trying to build that data and work on it, what should teams be using in the meantime to still try and get the best mqls they can, or read the best mqls they can without it being perfect? Well, I think this depends on the capacity of the team. You just got to start somewhere, right? So let's say, for example, that you have a large team to cover inbound. You don't have that many leads. Let's say, for example, you've got a handful of handraiser leads. OK, let's get on those. I mean, I always think handraiser's are the top already. Assuming their ICP, buyer personas, other things that are an indication that there's a strong fit, we want to respond as fast as possible. Let's focus on that first. Let's make sure that we're all over that. In theory, those leads should be converting. If they're not converting, it's like they've exhibited an incredibly high level of intent by reaching out proactively. But let's make sure they're ICP. Let's make sure they're buyer personas, etc. But those should convert. Then we have all the leads that are left over. We could set the bar super, super high, and we could say, well, like they have to come and attend a one hour webinar or whatever it is. And I think it's different for every organization. And I also don't pretend to be an expert at lead scoring other people on our team or waste murder at this than I am. But we have to start with something. And I don't want to overcomplicate it. If we're sitting in a situation where we're just like, OK, like none of our leads are converting, we know like the woman I spoke to, Josh, she's just like, I know that our score is terrible. Like she said, you know, we're giving 65 points based on just if they're like an ICP and a buyer person is in the threshold to 100 points. So it's like they do one thing and they're in MQL. I think a lot of times that's the situation. We look at this. I mean, I've definitely talked to a lot of customers. They're just like, anybody that gives us their email addresses in MQL. It's like, OK, all right. Like I think I know how to raise the bar on that. So just start somewhere. Like don't overcomplicate it, right? You know, you could say like 100 points is in MQL. And then like just everything is, I don't know, 20 points. And so they have to do five things in order to be in MQL, whatever. That's just a random example. And again, like if anybody's actually interested in a better answer, like talk to somebody else on my team about this. But I would say confidently that I think we need to start simple. And then we need to make sure that follow-up process is in place. So we can objectively measure it. We also should have some level of data on the leads that we've already converted. So I'd look back at those leads and I would say, OK, like let's just narrow in only on the leads that we've converted. What are the common characteristics of those leads? Do we see that a bunch of those folks like came to a webinar? We met those folks in an event. Or let's use an actual example. What's the deal we close the other day that you were looking at that they spent seven months on our website? Yeah, so we had that lead come in and we ended up closing them. And then I was interested to see like what was their journey? Like were they a part of our newsletter? Were they doing this and that? So I looked and I did see that there were a couple people with the company that were subscribed to our newsletter. And one specifically had subscribed last year. And this year they went to our website something like 35 times. And a lot of them, they were looking at like specific pages, specific frameworks. And that was just really interesting to me to see like how that interest built over time. And you know, we can only really see so much from just HubSpot data, right? So it's limited. But let's use others as an example, right? So let's say real world example, let's workshop our own business right now. Rachel, we don't have mqls. We only respond to people if they proactively reach out and raise their hand. Okay, so we've got this particular lead. They've filled out a forum to subscribe to the newsletter. So they're in our database. We know who they are. They come back to the website. They get a point. They come back again. They get a point. Let's just say Rachel. Every time they go to the website, it's 10 points. So they come to the website five times. That's 50 points. Every time they look at a framework, let's call that 20 points. And let's just say at 100 points, we reach out. What would that mean? That would mean that they would have gone to the website, signed up. That's 10 points. They come back. That's another 10 points. They come back. They check out two or three frameworks. There are 100 points. Boom, it's an mql. It comes to me or one of our sales reps. And we reach out. We call them and they're like, I'm not ready yet. Okay, cool. No problem. And then four months go by and then they reach out. And they're like, ready to buy. Well, then we might like raise our lead score. Again, like I said, I don't think this is an exact science. And also, I'm not the expert in this arena. But I think you've got to start with something simple. And I don't want anybody listening to this to think, well, we're starting from zero. And now this is overwhelming. I've got to go by six cents. I've got to put a score on every single thing that we do in marketing. I've got a line of score with like the industry and their revenue and the buyer persona. And it's like, yeah, okay, maybe eventually. But we got to start with something. Because whatever we come up with is just going to be a hypothesis. Yeah, until we can test it. Yeah. And it's going to be different in every business. Another metric to evaluate and kill performance. I know you've talked about this one before lead or a CAC payback to lead type. CAC payback to lead type. Yeah. I like that. Yeah, tell me about that. Because I remember hearing you talk about it before. But I can't remember what you said about it. Well, I'm a big fan of CAC payback just as a general rule, right? And so like, CAC payback basically, I don't actually like the way the metric is phrased. Just because I would rather think about it in other terms. But what it measures is how long does it take us like whatever we spend in sales and marketing to acquire our customer? How long does it take us to recoup that cost via the gross margin that we earn, right? Meaning in other words, if we sell a customer for $100,000 in our cost to actually serve them as a customer between like our server costs and our customer support team and all that other stuff is, let's say, $20,000. So we make 80 grand in gross margin. Well, if it costs us $80,000 to win that client, then it takes us an entire year to get our money back. And the rule of thumb is that like investors want to see that you're getting your money back in the year or less. Okay. I like that metric. I would rather measure it in other terms and know all the sudden I'm blanking on what those terms are. I think I'd rather look at it as like a percentage than like a number of months, which is usually how it's expressed. But whatever, the bottom line is like, it gives us a viewpoint into how much we're spending versus how much we're earning. Well, we could break that down on different lead types. And that might be like different channels. It might be different in our handraisers versus like our score based in QLs. We get sliced and dice it in any number of ways. And we could look at that and we could say, "Oh, wow. These leads are a cat payback is three months." Because we win such a high percentage of those deals that it doesn't cost us that much to acquire that customer because all the money that we're spending on XYZ to bring them in is significantly outweighed by the revenue that we earn because we've got such a higher conversion rate and close rate. Then we look at the other leads and we find out that that's the opposite. This kind of goes into like the unblended funnel, right? So we look at our cat payback and it's a year. But then we break it down and in certain places, it's three months and in other places is three years. So then that might like lend me to say, "Hey, if we back off of this stuff that takes us three years to earn our money back," or another way of phrasing this is like our cost is 300% of our gross margin to earn a customer. Then we could reallocate that capital somewhere else, hypothetically speaking, saying that the way you slice that is, you know, let's just use channels as an example and we find out that this podcast, our average cat payback is three months versus let's say that we're spending a bunch of money on ads and our cat payback is two years. And then we blend it all together and we're like, "We got a cat payback of a year. Everybody's super happy. Like we hit our metric and like, that's great. Let's pour more money into the marketing engine." And you say, "Well, wait a second. If we look at the podcast, like we should pour more money to that podcast and we should put more less money to ads." And I think this is a trap a lot of organizations fall into because at least folks I talk to, it's like not a lot of people are looking at it that granularly. And that's a real missed opportunity, especially from a capital allocation standpoint because I look at a business, it's a revenue factory, right? At least on the go to market side. And if I can better allocate capital in different areas based on my insights into how that capital is converting or that investment is converting into revenue and even better gross margin, then I have a better capability to build a revenue factory that produces more revenue per dollar that comes in the door. Yeah. And I really like this metric as well because correct me if I'm wrong, but it seems like it gives us kind of a quantitative idea of who our real ICP is and how we can rank a different maybe subtypes of ICP or maybe there is a lead type that is closer to our ICP than another just based on cat payback. Absolutely. I don't give you a real word example. I mean, I didn't exactly do a cat payback equation in the first three months that I started this business, but indirectly I did. I started this company. We started selling our initial engagements just like one time five eight 10 15 grand. And then after we had a reasonable number of customers, I looked back at the data and I just said, okay, like what happens with all these five thousand dollar customers and what happens with all the customers that spend more than five thousand dollars, super simple division. Well, it was the same level of effort to win these customers. There was nothing easier about winning a five thousand dollar customer versus a 10 or 15 thousand dollar customer. It's just like the activities that I did. I got leads via the sources that I worked. And then some of them wanted to spend five grand and some of them wanted to spend 10 or 15. I then looked at what that looked like from sort of like a lifetime value as much as I hate that metric. And our average customer that was spending more than five thousand dollars was doubling their spend within the next 12 months. Like they would give us eight grand. We'd do the work. They'd be happy with it and they'd say, Hey, could you guys do these other things? And we'd say, Yeah, pass another eight grand and they'd say, Okay, cool. No problem. And the customer that paid us five thousand dollars was like all the money they ever had in the world because they were smaller companies. And we'd say, Hey, there's all this other stuff that you probably should do too. And they're like, Oh, we can't afford that. Okay, cool. Well, what does that do to my cost of acquisition and my cat payback? Like without doing the exact math, it's pretty obvious. So I immediately shifted my focus to say, Well, let's raise our prices. Let's set our minimum to eight thousand dollars. And then all of our customers on average ended up doubling their spend with us in the first 12 months. And then we've like continued down that path. And now a years later, we charge significantly more than that. Ironically, we provide about the same amount of work for the same price. We just say, hey, like we would like to work with folks for a longer term basis. And that's been life changing for my business and for me personally. But this all comes down to looking at the data and trying to understand how much am I spending to try to acquire a customer via these channels and what is it paying off? And I looked at that, like, especially as an entrepreneur and I'm like, I'm a reasonably experienced salesperson that is just hustling as hard as I can to like close this $5,000 deal. And there's just no way that I can afford to hire somebody with the requisite level of experience to close this deal and make any money on it. I mean, in case anybody's interested, like these deals, not only did I need to be like halfway decent salesperson, but they would ask really technical questions about sales force. And I have to answer those two. So I'm like, I actually need two individuals. I need somebody who's really good at sales force and somebody who's like decent at selling. And there's just no way that I can afford to pay two people to do that to then close the $5,000 deal. There's just no way. Yeah. And when we were talking about like segmenting and unblending the funnel before, and this is such an important exercise to do for this reason exactly. And we did a whole podcast on this topic, unblending the funnel somewhat recently, but really quickly for the sake of the listeners right now, how do you recommend teams bucket or segment their mqls to get these meaningful insights. I think there's an infinite number of ways, right? I think one way is obviously by channel and that goes into lead attribution, which is really difficult, but we can look at different channels and we can try to understand like what the conversion rates look like. There's obviously intent, the simplest way to split this down is like our handraisers versus our non handraisers. We could slice it in other ways, let like exhibit intent, like looking at what particular actions people took. There's obviously the firmographic and the technographic data as well, like we might say, well, let's split this and say organizations of this size versus that size. I think there really are an infinite number of ways to look at this. What I might want to do if I was doing this is I'd look at the customers we've won, especially the ones that came via inbound for the purpose of this conversation. And I would try to just look at all of them and see if I could see any common threads. And I'd also look at like all the leads that never converted. And I try to see if I could see any common threads and I would form a hypothesis. I would say, okay, I feel like I keep seeing this here and I keep seeing that here. What if I create a report and I break this in two groups and I run that report to see like what the conversion rate looks like or the cat payback on assuming by the way that I can get the information for cat payback, like this is also an accounting issue. What does that look like? I think that's like kind of the heart of data driven proactive rebops is like there's not necessarily a silver bullet as much as like let me just look at the data and try to understand what it's telling me what can I infer from this. I mean, we went through this exercise Rachel when I first hired you where we had all these mqols that weren't converting. We looked at them and we're like, okay, like what is the revenue for each of these organizations who's the stakeholder, etc. And then I said, okay, like what happens if we draw the line at X dollars in revenue. What happens if we draw the line at whether or not they have a CRO and it was like night and day, like our conversion rates were like 20 30% for what we now define as our ICP and our buyer personas. And the other the rest of the leads was like 4% or like 2% and it was like, oh, okay, I don't have a silver bullet to give you and how to identify that it's more just looking at the data as much as you can. In our case, we didn't even have the data. We literally had to like go lead by lead by lead and like Google it. But we did that for a hundred leads and then we looked at and we're like, oh, wow, okay, this is very obviously the issue here. So now let's reengineer everything that we do in marketing to address this type of customer and this type of buyer persona in hopes that those people will reach out to us because we know that those are the leads that are going to convert. And it's like magic or mql to close one conversion rate went up by significantly and our mql to SQL rate and the mql to SQL conversion rate as well. We are computing a lot more of our leads that we're getting because we're just targeting a very, very specific subset of people right. And we still have more work to do. I mean, like we're guilty of it as well of like not being perfect. We still don't even like have any kind of like filter criteria like everybody that raises their hand is still like considered a lead, which is terrible because like everything that we just discussed is kind of being ignored when you run a report and you show like the mql conversion rate. The only way we've improved it is by generating different content. But we actually don't even like we haven't even technically changed our definition of an mql just because we've been busy and we need to go and reach the lead data and and hear that definition. And so what you're talking about is an improvement of mql conversion without changing our follow-up process and without changing our definition of an mql. Actually, there we go. You asked me this earlier and what we did is we changed our content. Yeah, and we're still changing. We're continuously still changing trying to tweak so that we to find the sweet spot of where we're like best serving that ICP right. Yeah, but it's pretty obvious to me that like I mean we had a lead come in the other day and it was like I mean it was just a person from an organization that had no salespeople and I'm like yeah, that's like that's obviously not a fit for what we do. But that's still showing up in our mql numbers and like I don't know I have no excuse for why we haven't fixed that. Yeah, no, we need to call get that. We'll get around to it. I still people it's like we do this stuff for other people like I think we do a lot of stuff for ourselves to but they're we do. Yeah, yeah. Well, what else I feel like we're running off on time here. Yeah, I mean there's not too much else to cover to be honest, but I wanted to ask so just to clarify we talked about like cack payback by lead and stuff like that. Would it be smart then to say we should actually be defining our mql itself based around cack performance. I mean I do want to be hesitant here like there's only so much you can do with cack and cack payback. I mean first you have to even be able to get the data right and so like I can go to accounting and I can get like the total amount of money that we're spending on sales wraps and then total amount of money we're spending on marketing. I mean even that is a little bit difficult. It's like where do you put the sales force license? Is that a cost of sales or is that somewhere else and like that right there just becomes complicated. But we figure that out and then you say okay well like what is our cack for our podcast leads. Well, we can just take every single lead that we have and just divide by our total cost of sales and marketing and then land on a figure for cack payback. A simpler way to do this is we might just look at like what's the lead value. I kind of like that metric as well where we just say okay you know we have X number of leads and they convert to X dollars of revenue. So each lead is worth X because it's basically just a very simple way to measure this so let's say that we generated 10 million dollars of business off of our podcast last year and in order to do that we had to generate. A hundred thousand leads well that means that each lead is worth a hundred dollars super simple math. And then we say okay we generated 10 million dollars of business off of ads as well and in order to do that we had to have like 500,000 leads. All right, cool. So then the value of a lead that comes in via ads is $20 and not $100 and then we could also just look at like what is our cost to produce a podcast versus our cost on ads. So okay, like we could maybe be a little bit objective about that but there are definitely limitations where you hit a wall and it's just like we don't have the data to measure that. So I want to be careful there and also it's sometimes like you ask me these questions that were like live on a podcast and I'm like I have to think about that for a minute to answer the question. But I don't want to like over prescribe that we like go too far down the rabbit hole on trying to measure everything perfectly. I think what's really important is that we get a really firm process in place we make sure we're following up with leads and we just take a step back every once we want to try to look at this and say like okay. What kind of lead should we try to be generating more of what ICP what buyer personas what channels what MQL definition should we focus our energy and resources on and let's just do the best that we can we just keep it rating. So what would be like the first thing CRO or revenue leaders should go and audit after listening to this episode at the very first report or thing that they should check. It depends on like where they're at. I mean if they're at an early stage not as a company but in this regard what we're talking about here. The first thing that I would want to look at is what is our follow up process look like and or what is our speed to lead on our handraisers. And oftentimes the answer is we can't measure that because we don't have a process that we're consistently executing and or we don't have the tooling in place and or we're not holding people accountable. So that's the very first thing the second thing that I would want to look at is are we collecting data that we can use to measure the things that are important. This gets into lead attribution it gets into lead enrichment. I mean part of the reason that you know we had a problem with looking at our own leads is because we I guess we have clay now I don't think we had clay then we didn't have any lead enrichment tool just because you know small business type budgets etc. Lead enrichment tools you know I like googling stuff I don't even know if clay was like a thing back then I don't know probably we'd probably be like the second thing that I would look at is are we collecting data so that we will then have the opportunity. Within reason to slice and dice our data I'm a big fan of whatever fine labs calls self declared attribution or self reported attribution just like we have a form on our website how do you hear about us I found that field we've been doing this for years at this point. To be quite accurate like it's really interesting people will go on and I'll say newsletter podcast linked and I'm like oh funny that's those things that we spend our time and money on yeah what if we're incidents and it's really interesting to see how often they mentioned the newsletter versus how often they mentioned. The podcast and then you also I don't even know how you do it you have all this inside via HubSpot is still like all the stuff people are doing our website which is really nice to. See good see good now is not much of a secret is just a time spot I just don't know what I'm. time in HubSpot. Well those were all the questions that I had for this topic today which is perfect because we're coming up right on time. Awesome. Thank you Rachel this was fun as always. Yeah thanks Eddie. Thanks for listening to the show. If this resonated and/or you'd like help with anything we talked about in the show please reach out to us. You can find us at unionsquareconsulting.com and the info will be in our show notes.